16 Nov 2011

Rakon sees hope in smart phone growth

7:41 am on 16 November 2011

Rakon says it has lost $1 million for every one-cent rise in the New Zealand dollar over the past six months.

The company's books slipped into the red with a loss of $259,000 in the six months to the end of September, compared with a profit of $5.6 million the same period last year.

Rakon makes and exports components for global positioning systems and mobile phones and is one of the sharemarket's Top 50 companies.

Chief executive Brent Robinson says the high New Zealand dollar, which averaged 81 US cents in the half year, has hurt its profitability.

Mr Robinson says Rakon has locked in an exchange rate of an average 78 US cents for the next year.

He says there has also been less demand for mobile phones and telecommunications infrastructure since the earthquake in Japan and crisis in the Eurozone.

"We think that telcos react very early to any global economic strife on the horizon, so we're already starting to see the effect of that," Mr Robinson says.

"But looking past that, we think that there's still a lot of growth in data required. The projected growth in data is quite astronomical."

Mr Robinson expects more people to start using smart phones and he says the market will be insulated from any global recession.

He says Rakon is on track to meet its projected earnings before interest and tax of between $14 million and $18 million.

Shares in the company fell six cents to 61 cents each on Tuesday.